Large companies buck the corporate insolvency trend

 

The number of large UK companies being declared insolvent dropped last month, despite a rise in corporate insolvency rates across all businesses around the country.

Figures from the global information services company Experian show that 13 per cent fewer organisations with 501 or more employees failed in July compared to the same month last year.

Overall, the financial strength score of businesses in the UK fell from 80.93 to 79.84 over the 12-month period. However, large companies bucked the trend, with an improvement in their score from 84.20 last July to 86.13 this July.

Max Firth, managing director of Experian Business Information Services, said the drop in insolvencies among bigger firms is “good news” because when a large company fails, it can have a domino effect across the rest of the business economy.

“However,” he warned, “this doesn’t lessen the need for all organisations, regardless of their size or sector, to be mindful of the risks their customers, suppliers and partners can expose them to.

“It is vital that businesses fully understand the financial strength of those they do business with by checking their commercial credit score and late payment trends.”

The data shows that businesses employing between 51 and 100 people saw the biggest annual increase in insolvencies during the year, with 0.22 per cent of companies in this category failing in July 2011, compared to 0.15 per cent in July 2010.

But it was small firms that experienced the highest number of business failures overall, with 0.26 per cent of companies with 11 to 25 employees going under last month.

Earlier this month, figures released by the Insolvency Service showed that company insolvencies rose by 2.7 per cent in the second quarter of this year compared to the previous quarter and by 4.4 per cent compared to the corresponding quarter in 2010.